The consumer’s issue:
“My parents purchased a new vehicle on a two-year PCP agreement. Four months prior to the lease coming to term, the dealership contacted my parents and asked them to come in to discuss their options. During this visit, my parents were told that due to a shortage of second hand cars in the market, the dealership was prepared to discuss a new deal early with them. The business explained that the price offered for their car could not be guaranteed if they were to wait until the end of the lease. My parents thought they have been done a favour, and I believe a good job has been done of misleading them and that two sales devices have been employed: manufactured scarcity and offering a time-limited deal. They were also sold a key protection scheme for the value of £400 over three years, which is covered under their home insurance. Changing the car early also led to an administration charge of £30.89 to amend the car insurance. Lastly, this model is inferior to what they had previously, and I am therefore seeking the failure in customer care to be acknowledged, a written apology, and refunds of the £2,000 deposit, the cost of the key protection scheme and the insurance administration fee, plus compensation of £500.“
The accredited business’ response:
- We contacted the consumer’s parents on 08 September 2017 as the manufacturer normally sends a six and three-month agreement end follow-up request, as leaving the discussion too close to the end date is not deemed to be good customer care.
- The end date of the agreement in this case was 01 March 2018.
- We wanted to discuss the consumer’s parents either giving the car back, refinancing the lump sum or part-exchanging the car.
- The consumer’s parents wanted to explore the part-exchange route, which was our preferred option.
- We are always short of good quality used examples of their model, and this was not a cheap sales tactic.
- On 10 September 2017, the consumer’s parents decided to keep their current car and the system was updated as a lost sale.
- On 27 October 2017, the consumer’s parents visited the showroom and asked for figures to change their car.
- They negotiated to get a better deal and we offered a higher than average value for the part-exchange, plus an additional discount.
- The consumer’s parents took the figures away and returned on 28 October 2017, putting down a deposit.
- A paint protection product was sold, which was presented as a product with many benefits.
- On 11 November 2017, the consumer’s parents collected their new vehicle and were very complimentary about their experience with us.
The adjudication outcome:
- The adjudicator did not uphold the customer’s complaint.
- The consumer’s parents had signed all of the documentation, which demonstrated that they were clear on the deal and were happy to accept it.
- They had also signed to agree to purchasing the paint protection product.
- Because the parties disagreed about what was discussed at the point of sale, it was difficult for the adjudicator to know what the dealership said – however, there was no proof that they had employed any kind of sales tactics to mislead the consumer’s parents into purchasing the vehicle.
- The customer disagreed as he felt that his parents had only agreed because they had been deceived and that there was no good reason for them to change their car early.
- The consumer requested a final decision from the ombudsman.
The ombudsman’s final decision:
- The ombudsman also did not uphold the customer’s complaint.
- On the question of misleading sales practices, the ombudsman did not consider it unreasonable for the dealership to contact the consumer’s parents to discuss the end of their agreement.
- She recognised that a dealership is there to sell and that the chilling effect of ruling that dealerships cannot contact sales prospects is not one she wished to create.
- She observed that there was no reason, as such, for the consumer’s parents to end the agreement early, but considering that their options at the end of the agreement were either to part-exchange the vehicle, hand it back or pay £8,000 to keep it, it was most likely that the consumer’s parents would have part-exchanged it as this would have meant a deposit of around £2,000 for a brand new car as opposed to paying a further £8,000 for their older one.
- She also noted that the payments for the new car were only £1 a month more and that it is feasible the discounts available in October 2017 would not still be available in March 2018.
- Overall, therefore, the deal made in October 2018 was equal or better than a deal that would have been made in March 2018.
- The ombudsman couldn’t see that the dealership had manufactured scarcity as the model was a factory build, meaning there should be adequate supply, and that the scarcity was in relation to their part-exchange and the value that could be offered for it.
- She also didn’t consider that time-limiting the deal was unfair as the value of vehicles changes daily meaning a part-exchange valuation will fluctuate and change the terms of a deal.
- With the key cover, the product that was sold was paint protection which included key cover – whilst the ombudsman didn’t know the sales process which was followed, the consumer’s parents had declined GAP insurance despite this being recommended for them which led her to conclude that they had consciously decided to take the paint protection.
- There was no evidence to suggest they had been sold an inferior model.
Conclusion:
- The technical evidence demonstrated that the repair was excluded under warranty, and as such, there was no breach of the Vehicle Warranty Products Code.
- However, the accredited business was asked to uphold their gesture of goodwill.
